UK retailers lose more than £10bn every year to shrinkage

Shrinkage is costing UK retailers almost £11bn annually – the highest of any country in Europe, a new report has discovered. Following feedback from retailers in 11 countries, the report also reveals the most stolen items and tactics used by dishonest shoppers.

UK retailers

According to the ‘Retail Security in Europe. Going beyond Shrinkage’ report, conducted by Crime&tech with the support of Checkpoint Systems, the global leader in source to shopper solutions, shrinkage cost retailers £10.96bn annually in 2017. The value includes external and internal theft, as well as administrative errors, non-compliant use, waste, expired goods and damaged cold items and goods.

Previous analysis by Checkpoint has shown that UK retailers suffered 1,000-plus daily incidents of shoplifting in 2018, and the new Europe-wide research states that stores were found to be spending a total of £3.09bn on measures to prevent losses of around £7.86bn every year.

Shrinkage in Europe

While the cost of both shrinkage and preventative measures is highest in the UK, retailers in Belgium, Finland, France, Italy, Germany, the Netherlands, Poland, Russia, Spain and Sweden are also suffering, with the total economic cost of retail losses estimated at 2.1% of retail sector turnover, the equivalent of £43.6bn per year.

Hardest hit: grocery sector

The report reveals that, across Europe, shrinkage is most likely to affect the grocery and cash & carry sector. Grocers and convenience stores have an average shrinkage rate of 2%, with UK grocers alone reporting a cost of £4.4bn a year. The top five stolen items by value in food retail were named: alcoholic drinks, cheese, meat, sweets and canned fish.

Department stores and apparel

After the grocery sector, department stores and apparel retailer were the hardest hit by shrinkage in the UK at £2.1bn and £783m a year respectively. Across Europe, accessories, knitwear, trousers and blouses were the most attractive items to steal, with mobile phones and accessories topping the list in electronics. In total, the shrinkage rate for apparel retailer across Europe was 1.4% of turnover.

Among the main findings the report also revealed:

·   The most common criminal causes of shrinkage in the UK is shoplifting, followed by robberies and burglaries

·   Among profiles of shoplifters, together with micro-gangs of 2-3 persons, UK retailers also highlighted individuals – sometimes customers who become thieves by frustration or opportunity – especially in the presence of self-scan and self-checkout services

·   Half of UK retailers surveyed thought shoplifting was increasing while 17% said it was decreasing and 33% believed the rate was stable

·   UK shoplifters most frequently use the ‘grab and run’ method

Mike French, business unit director of Checkpoint Systems UK, said: “Shrinkage in the UK is the highest of any country in Europe, and despite high levels of investment in anti-shrinkage measures across the continent factors such as non-compliance and obsolete technology causing unsustainable levels of retail shrinkage. Retailers need to take urgent action to reduce this if they are to remain competitive and profitable.

“Checkpoint has a long history of providing insightful research into retail loss, having sponsored and published several respected reports over the last 16 years. The new Retail Security in Europe study will help retailers to assess and define their own loss prevention strategies while reducing theft and improving the customer experience.

“As we mark our 50th anniversary this year, we understand that this is more important than ever. The fact that shrinkage, if converted to turnover, would represent the fourth largest retailer in Europe should not be taken lightly. It’s extremely worrying that the actions of the few can financially impact businesses and employees. In light of today’s tough retail climate, it’s more important than ever for retailers to take note of the findings and take the necessary actions to reduce their losses.”

Speaking about the report Prof. Ernesto Savona, director of Crime&tech, added: “The research reveals that retailers across Europe are using a mixture of techniques to measure shrinkage, which include a variety of both crime and non-criminal losses. All these different approaches shall be kept in mind when interpreting the results presented. For this reason, the study goes beyond shrinkage, and it analyses retailers’ inventory policies and technologies, the contextual factors that have an impact on retail losses, the modus operandi of shoplifters, and how countermeasures and security solutions are adopted and combined together.”